Gold prices rose on Friday as risk aversion swept across financial markets following media reports on explosions in Iran, prompting fears of a wider regional conflict and increasing bullion’s safe-haven appeal.
Spot gold GOLD rose 0.3% at $2,386.05 per ounce, as of 0429 GMT, after briefly jumping as high as $2,417.59 earlier in the session, not far from an all-time high of $2,431.29 hit last Friday. Bullion was set for a fifth straight weekly rise and has risen about 2% so far this week.
U.S. gold futures 
GOLD rose 0.1% at $2,401.20.
The news of Israel’s attacks on Iran today “is driving gold price attention on the Middle East which has been the sole thing keeping the gold price moving higher for weeks now. Market is now waiting for more information about the nature of the attack, and what the response would be,” said Kyle Rodda, a financial market analyst at Capital.com.
“Gold is not a monetary policy trade at the moment, it’s a geopolitics trade,” Rodda said.
Israel has attacked Iran, three people familiar with the matter said, as Iranian state media reported early on Friday that its forces had destroyed drones, days after Iran launched a retaliatory drone strike on Israel.
Eventually, even if geopolitical risks subside, “Chinese gold reserve accumulation acts as the major catalyst. That is a process that seems to have scope for continuity, favoring gold’s upside bias,” Ilya Spivak, head of global macro at Tastylive said.
Meanwhile, Federal Reserve policymakers have gathered around the idea of keeping borrowing costs where they are until perhaps well into the year, given the slow and bumpy progress on inflation and a still-strong U.S. economy. Higher interest rates increase the opportunity cost of holding non-yielding bullion.
Amongst other precious metals, spot silver 
XAGUSD1! rose 0.2% to $28.28 per ounce, and was set for a weekly gain.
Spot platinum 
PL1! rose 0.6% at $938.39, and palladium 
XPDUSD1! was steady at $1,023.09. Both sister metals were headed for a weekly decline.
Insight into Gold Price Movement
The increase in gold prices on Friday was driven by risk aversion in the financial markets following reports on explosions in Iran. The heightened geopolitical tensions have boosted gold’s safe-haven appeal, leading to a rise in its value. This situation underscores how global political events can significantly impact precious metal prices.
Geopolitics Trade vs. Monetary Policy Trade
As noted by Kyle Rodda, a financial market analyst, the current surge in gold prices is more a result of geopolitical tensions rather than monetary policy. The focus is on developments in the Middle East and how they influence the gold market. This shift highlights the role of geopolitics in shaping investment decisions in commodities like gold.
Chinese Gold Reserve Accumulation and Federal Reserve Policy
Apart from geopolitical factors, the accumulation of gold reserves by China is identified as a key catalyst for gold’s upward trend. This ongoing process adds a layer of support to gold prices, further fueling the positive sentiment towards the precious metal. Additionally, the Federal Reserve’s approach of maintaining borrowing costs at their current levels reflects a cautious stance towards economic indicators, impacting the opportunity cost of holding gold.
Diversification and Outlook for Other Precious Metals
While gold has been the focus of recent attention due to geopolitical tensions, other precious metals like silver, platinum, and palladium also exhibit varying price movements. Silver is experiencing a weekly gain, highlighting its potential as a diversified investment option. On the other hand, platinum and palladium face slight declines, indicating a nuanced outlook for different precious metals in the current market environment.
